What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-08-11 compared with 2025-05-12 · 338 added, 158 removed, 440 unchanged (53% of the section changed)

14 unchanged sentences

In this report, we refer to all of such contracts and loans as "automobile contracts."

We were incorporated and began

our operations in March 1991.

From inception through March 31, 2025, we have originated a total of approximately $23.5 billion of automobile

contracts, primarily by purchasing retail installment sales contracts from dealers, and to a lesser degree, by originating loans secured

by automobiles directly with consumers.

In addition, we acquired a total of approximately $822.3 million of automobile contracts in mergers

and acquisitions in 2002, 2003, 2004 and 2011.

Recent contract purchase volumes and managed portfolio levels are shown in the table below:

Contract Purchases and

Outstanding Managed Portfolio

We were incorporated and

began our operations in March 1991.

From inception through June 30, 2025, we have originated a total of approximately $23.9 billion of

automobile contracts, primarily by purchasing retail installment sales contracts from dealers, and to a lesser degree, by originating

loans secured by automobiles directly with consumers.

In addition, we acquired a total of approximately $822.3 million of automobile

contracts in mergers and acquisitions in 2002, 2003, 2004 and 2011.

Recent contract purchase volumes and managed portfolio levels are

shown in the table below:

Contract Purchases and Outstanding Managed Portfolio

$ in thousands

1 unchanged sentence

Managed Portfolio at Period End

Three months ended March 31, 2025

Six months ended June 30, 2025

In May 2021 we began purchasing

3 unchanged sentences

in the third-party portfolio.

For the three months ended March 31, 2025, we originated $4.3 million under this third-party program.

of March 31, 2025, our managed portfolio includes $160.1 million of such third-party receivables.

For the six months ended June 30, 2025, we originated $8.3 million under this third-party program.

June 30, 2025, our managed portfolio includes $146.4 million of such third-party receivables.

Our principal executive offices

13 unchanged sentences

Securitization and Warehouse Credit Facilities

Throughout the period for which

information is presented in this report, we have purchased automobile contracts with the intention of financing them on a long-term basis

through securitizations, and on an interim basis through warehouse credit facilities.

Throughout the period for

which information is presented in this report, we have purchased automobile contracts with the intention of financing them on a long-term

basis through securitizations, and on an interim basis through warehouse credit facilities.

All such financings have involved identification

4 unchanged sentences

our active securitizations are structured as secured financings.

When structured to be treated as a secured financing

for accounting purposes, the subsidiary is consolidated with us.

Accordingly, the sold automobile contracts and the related debt appear

as assets and liabilities, respectively, on our consolidated balance sheet.

We then periodically (i) recognize interest and fee income

on the contracts, and (ii) recognize interest expense on the securities issued in the transaction.

For automobile contracts acquired after

2017 we take account of estimated credit losses in our computation of a level yield used to determine recognition of interest on the contracts.

For contracts acquired before 2018, we adopted CECL on January 1, 2020, and we may, as circumstances warrant, record or reverse expense

provisions for credit losses.

When structured to be treated as a secured financing for accounting purposes,

the subsidiary is consolidated with us.

Accordingly, the sold automobile contracts and the related debt appear as assets and liabilities,

respectively, on our consolidated balance sheet.

We then periodically (i) recognize interest and fee income on the contracts, and (ii)

recognize interest expense on the securities issued in the transaction.

For automobile contracts acquired after 2017 we take account

of estimated credit losses in our computation of a level yield used to determine recognition of interest on the contracts.

For contracts

acquired before 2018, we adopted CECL on January 1, 2020, and we may, as circumstances warrant, record or reverse expense provisions

for credit losses.

Since 1994 we have conducted

105 term securitizations of automobile contracts that we originated.

As of March 31, 2025, 18 of those securitizations are active and

all are structured as secured financings.

As of June 30, 2025, 17 of those securitizations are active and all

are structured as secured financings.

We generally conduct our securitizations on a quarterly basis, near the beginning of each calendar

2 unchanged sentences

is summarized in the table below:

Recent Asset-Backed Term

Securitizations

Recent Asset-Backed Term Securitizations

$ in thousands

1 unchanged sentence

Receivables Pledged in Term Securitizations

Three months ended March 31, 2025

Six months ended June 30, 2025

Generally, prior to a securitization

2 unchanged sentences

funding capacity of $535 million over two credit facilities.

The first credit facility was established in May 2012.

This facility was

most recently renewed in July 2024, extending the revolving period to July 2026, with an optional amortization period through July 2027.

In addition, a subordinated lender was added to the credit facility in November 2024, effectively increasing our advance rate to a maximum

of 95% for eligible receivables across the facility.

The capacity was then increased from $200 million at the most recent renewal date

to $335 million in December 2024.

The first credit facility was established in May 2012 with Citibank, N.A.

This facility was most recently renewed in July 2024, extending the revolving period to July 2026, with an optional amortization period

through July 2027.

In addition, a subordinated lender was added to the credit facility in November 2024, effectively increasing our advance

rate to a maximum of 95% for eligible receivables across the facility.

The capacity was then increased from $200 million at the most recent

renewal date to $335 million in December 2024.

In November 2015, we entered

into another $100 million facility.

In June 2022, we increased the capacity of our credit agreement with Ares Agent Services, L.P.

into another $100 million facility with Ares Agent Services, L.P..

In June 2022, we increased the capacity of that credit agreement from

$100 million to $200 million.

35 unchanged sentences

such other event of default were to be accompanied by acceleration of such other indebtedness.

As of March 31, 2025, we were in compliance

As of June 30, 2025, we were in compliance

with all such covenants.

1 unchanged sentence

Comparison of Operating Results

for the three months ended March 31, 2025, with the three months ended March 31, 2024

the three months ended March 31, 2025, our revenues were $106.9 million, an increase of $15.2 million, or 16.6%, from the prior year revenue

for the three months ended June 30, 2025, with the three months ended June30, 2024

the three months ended June 30, 2025, our revenues were $109.8 million, an increase of $13.9 million, or 14.5% from the prior year revenue

of $95.9 million.

1 unchanged sentence

average outstanding balance of finance receivables measured at fair value.

Revenues for the three months ended March 31, 2025, include

Revenues for the three months ended June 30, 2025, include

a $3.0 million mark up to the recorded value of the finance receivables measured at fair value.

3 unchanged sentences

In the current period, our re-evaluation of the fair values of these receivables resulted

in a mark up for certain older receivables and a mark down to the fair values of newer receivables.

The fair value mark up on the older

receivables exceeded the mark down to the newer receivables resulting in a net mark up of $3.5 million.

There was a $5.0 million mark

up to the fair value portfolio in the prior year period.

in a mark up for certain receivables and a mark down to the fair values of selected receivables.

The net effect of the marks to the fair

value resulted in a net mark up of $3.0 million.

There was a $5.5 million mark up to the fair value portfolio in the prior year period.

Interest income for the three

months ended March 31, 2025, increased $17.6 million, or 20.9%, to $101.9 million from $84.3 million in the prior year.

months ended June 30, 2025, increased $17.0 million, or 19.2%, to $105.4 million from $88.4 million in the prior year.

The primary reason

3 unchanged sentences

finance receivables.

The table below shows the average balance and interest yield of our loan portfolio for the three months ended March

The table below shows the average balance and interest yield of our loan portfolio for the three months ended June

30, 2025 and 2024:

Three Months Ended March 31,

Three Months Ended June 30,

(Dollars in thousands)

1 unchanged sentence

Loan Portfolio

Other income was $1.4 million for the three months ended March

Other income was $1.4 million for the three months ended June

30, 2025, compared to $2.0 million for the comparable period in 2024.

1 unchanged sentence

and servicing fees we earned from third party receivables.

These fees were $1.4 million for the quarter ended March 31, 2025, compared

These fees were $1.4 million for the quarter ended June 30, 2025, compared

to $1.7 million in the prior year period.

18 unchanged sentences

Total operating expenses were

$100.1 million for the three months ended March 31, 2025, compared to $85.2 million for the prior period, an increase of $14.9 million,

The increase is primarily due to increases in interest expense and to a lesser extent, increases to sales costs.

$102.8 million for the three months ended June 30, 2025, compared to $89.2 million for the prior period, an increase of $13.6 million,

The increase is primarily due to increases in interest expense.

Employee costs were $24.4 million

during the three months ended March 31, 2025, compared to $24.4 million for the same quarter in the prior year, an increase of $617,000,

during the three months ended June 30, 2025, compared to $23.7 million for the same quarter in the prior year, an increase of $637,000,

The table below summarizes our employees by category as well as contract purchases and units in our managed portfolio as of,

and for the three-month periods ended, March 31, 2025, and 2024:

Three Months Ended March 31,

and for the three-month periods ended, June 30, 2025, and 2024:

Three Months Ended June 30,

(Dollars in millions)

11 unchanged sentences

services, and telecommunications.

General and administrative expenses was $13.5 million, a decrease of $211,000 from $13.8 million in

the prior year period.

General and administrative expenses was $13.2 million, a decrease of $77,000 from $13.3 million in the

prior year period.

Interest expense for the three

months ended March 31, 2025, was $54.9 million and represented 54.9% of total operating expenses, compared to $42.0 million in the previous

months ended June 30, 2025, was $58.7 million and represented 57.1% of total operating expenses, compared to $46.7 million in the previous

year, when it was 52.4% of total operating expenses.

The $12.9 million increase in interest expense compared to the same three month period

in the prior year was largely due to the volume, and to a lesser extent, due to the rate.

Interest on securitization trust

debt increased by $9.1 million for the three months ended March 31, 2025, compared to the prior period.

The $12.0 million increase in interest expense compared to the prior year period

was largely due to increases in the average balance of our securitization trust debt, warehouse credit line debt and residual interest

financing debt.

To a lesser extent, the increase is also due to the increase in the interest rate on our securitization trust debt.

Interest on securitization

trust debt increased by $7.6 million for the three months ended June 30, 2025, compared to the prior period.

The average balance of securitization

trust debt increased to $2,861.9 million for the three months ended March 31, 2025, compared to $2,388.1 million for the three months

ended March 31, 2024.

The annualized average rate on our securitization trust debt was 6.3% for the three months ended March 31, 2025,

trust debt increased to $2,811.9 million for the three months ended June 30, 2025, compared to $2,555.2 million for the three months

ended June 30, 2024.

The annualized average rate on our securitization trust debt was 6.5% for the three months ended June 30, 2025,

compared to 5.9% in the prior year period.

9 unchanged sentences

Interest expense on warehouse

credit line debt increased by $2.2 million to $6.5 million for the three months ended March 31, 2025, compared to $4.3 million in the

prior year period.

credit line debt increased by $2.5 million to $8.2 million for the three months ended June 30, 2025, compared to $5.7 million in the prior

The increase was primarily due to the higher utilization of our credit lines during the quarter compared to last year.

The average balance of our warehouse debt was $275.8 million during the three months ended March 31, 2025, compared to $164.9 million

for the same period in 2024.

The annualized average rate on our credit line debt was 9.4% for the three months ended March 31, 2025, compared

to 10.5% in the prior year period.

average balance of our warehouse debt was $353.2 million during the three months ended June 30, 2025, compared to $215.4 million for the

same period in 2024.

The annualized average rate on our credit line debt was 9.3% for the three months ended June 30, 2025, compared to

10.6% in the prior year period.

Interest expense on subordinated

renewable notes was $646,000 for the three months ended March 31, 2025.

renewable notes was $684,000 for the three months ended June 30, 2025.

The average balance of the outstanding subordinated debt was $28.0

million for the three months ended March 31, 2025, compared to $20.8 million for the prior year period.

The average yield of subordinated

notes decreased to 9.6% compared to 9.7% in the prior period.

million for the three months June 30, 2025, compared to $22.3 million for the prior year period.

The average yield of subordinated notes

is 9.7% for both current and in the prior period.

In June 2021, March 2024, and

again on March 20, 2025, we completed a securitization of residual interests from other previously issued securitizations in the amount

again on June 30, 2025, we completed a securitization of residual interests from other previously issued securitizations in the amount

of $50 million, $50 million, and $65 million, respectively.

Interest expense for these residual interest financings was $4.2 million for

the three months ended March 31, 2025, compared to $1.2 for the same period in 2024.

the three months ended June 30, 2025, compared to 2.5 million for the same period in 2024.

The following table presents

the components of interest income and interest expense and a net interest yield analysis for the three-month periods ended March 31, 2025,

Three Months Ended March 31,

the components of interest income and interest expense and a net interest yield analysis for the three-month periods ended June 30, 2025,

Three Months Ended June 30,

(Dollars in thousands)

Annualized Average

Interest Earning Assets

9 unchanged sentences

(1) Average balances are based on month end balances except for warehouse lines of credit, which are based on daily balances.

(2) Annualized net interest income

divided by average interest earning assets.

Three Months Ended June 30, 2025

Compared to June 30, 2024

(In thousands)

Interest Earning Assets

Loan Portfolio

Interest Bearing Liabilities

Warehouse lines of credit

Residual interest financing

Securitization trust debt

Subordinated renewable notes

Net interest income/spread

Our evaluation of the allowance

for credit losses indicated that the reserves against future losses are adequate as of June 30, 2025.

The allowance applies only to our

finance receivables originated through December 2017, which we refer to as our legacy portfolio.

receivables that we have originated since January 2018 are accounted for at fair value.

Under the fair value method of accounting, we

recognize interest income net of expected credit losses.

Thus, no provision for credit loss expense is recorded for finance receivables

measured at fair value.

For the three months ended

June 30, 2025, we recorded a reduction to provision for credit losses on finance receivables in the amount of $781,000.

The reserve decrease

was primarily due to better than expected recovery rates and a decrease in lifetime expected credit losses resulting from improved credit

performance as our previous estimates for future losses exceeded actual incurred losses.

This compares to $2.0 million in reductions

to provision for credit losses for the three months ended June 30, 2024.

Sales expenses consist primarily

of commission-based compensation paid to our employee sales representatives.

Our sales representatives earn a salary plus commissions

based on volume of contract purchases.

Sales expense decreased to $5.7 million during the three months ended June 30, 2025 from $5.9 million

for the same quarter in 2024.

We purchased $433.0 million of new contracts during the three months ended June 30, 2025 compared to $431.9

million in the prior year period.

Occupancy expenses was $1.4

million for the three months ending June 30, 2025, which is up from $1.3 million in the second quarter of 2024.

Depreciation and amortization

expenses increased to $249,000 compared to $221,000 in the previous year.

For the three months ended June 30, 2025, we recorded

income tax expense of $2.2 million, representing a 31% effective tax rate.

In the prior period, our income tax expense was $2.0 million,

representing a 30% effective tax rate.

Comparison of Operating Results for the

six months ended June 30, 2025 with the six months ended June 30, 2024

the six months ended June 30, 2025, our revenues were $216.6 million, an increase of $29.0 million, or 15.5%, from the prior year revenue

of $187.6 million.

The primary reason for the increase in revenues is the increase in interest income resulting from the increase in the

average outstanding balance of finance receivables measured at fair value.

Revenues for the six months ended June 30, 2025 include a $6.5

million mark up to the recorded value of the finance receivables measured at fair value.

The marks are estimates based on our evaluation

of the appropriate fair value and future earnings rate of existing receivables compared to recently acquired receivables and increases

or decreases in our estimates of future net losses.

In the current period, our re-evaluation of the fair values of these receivables resulted

in a mark up for certain receivables and a mark down to the fair values of selected receivables.

The net effect of the marks to the fair

value resulted in a net mark up of $6.5 million..

There was a $10.5 million mark up to the fair value portfolio in the prior year period.

Interest income for the six

months ended June 30, 2025 increased $34.6 million, or 20.1%, to $207.3 million from $172.7 million in the prior year.

The primary reason

for the increase in interest income is the 18.6% increase in the average balance of our loan portfolio over the prior year period.

interest yield on our total loan portfolio increased from 11.3% in the prior year period to 11.4% in the current year period.

yield on receivables measured at fair value is reduced to take account of expected losses and is therefore less than the yield on other

finance receivables.

The table below shows the average balance and interest yield of our loan portfolio for the six months ended June

30, 2025 and 2024:

Six Months Ended June 30,

(Dollars in thousands)

Interest Earning Assets

Loan Portfolio

Other income was $2.8 million

for the six months ended June 30, 2025 compared to $4.5 million for the comparable period in 2024.

36.4% decrease was primarily driven by the decrease in origination and servicing fees we earned from third party receivables.

were $2.8 million for the six months ended June 30, 2025 compared to $3.8 million in the prior year period.

Our operating expenses

consist largely of interest expense, provision for credit losses, employee costs, sales and general and administrative expenses.

for credit losses is affected by the balance and credit performance of our portfolio of finance receivables (other than our portfolio

of finance receivables measured at fair value, as to which expected credit losses have the effect of reducing the internal rate of return

or the recorded value applicable to such receivables).

Interest expense is significantly affected by the volume of automobile contracts

we purchased during the trailing 12-month period and the use of our warehouse facilities and asset-backed securitizations to finance those

Employee costs and general and administrative expenses are incurred as applications and automobile contracts are received,

processed and serviced.

Factors that affect profit margins and net income include changes in the automobile and automobile finance market

environments, and macroeconomic factors such as interest rates and changes in the unemployment level.

Employee costs include base

salaries, commissions and bonuses paid to employees, and certain expenses related to the accounting treatment of outstanding stock options

and are one of our most significant operating expenses.

These costs (other than those relating to stock options) generally fluctuate with

the level of applications and automobile contracts purchased and serviced.

Other operating expenses consist

largely of facilities expenses, telephone and other communication services, credit services, computer services, sales and advertising

expenses, and depreciation and amortization.

Total operating expenses were

$202.9 million for the six months ended June 30, 2025, compared to $174.4 million for the prior period, an increase of $28.5 million,

The increase is primarily due to increases in interest expense and a decrease in the reduction to provision for credit losses.

To a lesser extent, increases to employee costs and sales expenses also contributed to the increase in operating expenses during the period.

Employee costs were $49.4 million

during the six months ended June 30, 2025 compared to $48.1 million for the same period in the prior year.

The table below summarizes

our employees by category as well as contract purchases and units in our managed portfolio as of, and for the six-month periods ended,

June 30, 2025 and 2024:

Six Months Ended June 30,

(Dollars in millions)

Contracts purchased (dollars)

Contracts purchased (units)

Managed portfolio outstanding (dollars)

Managed portfolio outstanding (units)

Number of Originations staff

Number of Sales staff

Number of Servicing staff

Number of other staff

Total number of employees

General and administrative expenses

include costs associated with purchasing and servicing our portfolio of finance receivables, including expenses for facilities, credit

services, and telecommunications.

General and administrative expenses were $26.7 million for the six months ended June 30, 2025, an increase

of $287,000 from $27.0 million in the prior year period.

Interest expense for the six

months ended June 30, 2025 was $113.6 million, compared to $88.7 million in the previous year, an increase of $24.9 million.

Interest on securitization trust

debt increased by $16.7 million for the six months ended June 30, 2025 compared to the prior period.

The average balance of securitization

trust debt increased to $2,836.9 million for the six months ended June 30, 2025 compared to $2,471.7 million for the six months ended

June 30, 2024.

The annualized average rate on our securitization trust debt was 6.4% for the six months ended June 30, 2025 compared to

6.0% in the prior year period.

The blended interest rates on new term securitizations have been increasing since 2022.

For each quarterly

securitization transaction, the blended cost of funds is ultimately the result of many factors including the market interest rates for

benchmark swaps of various maturities against which our bonds are priced and the margin over those benchmarks that investors are willing

to accept, which in turn, is influenced by investor demand for our bonds at the time of the securitization.

These and other factors have

resulted in fluctuations in our securitization trust debt interest costs.

The blended interest rates of our recent securitizations are

summarized in the table below:

Blended Cost of Funds on Recent Asset-Backed Term Securitizations

Blended Cost of Funds

September 2024

Interest expense on warehouse

credit line debt increased by $4.7 million to $14.7 million for the six months ended June 30, 2025 compared to $10.0 million in the prior

The increase was due to higher rates on the debt during the six month period compared to last year.

The average balance of

our warehouse debt was $314.7 million during the six months ended June 30, 2025 compared to $190.1 million for the same period in 2024.

The annualized average rate on our credit line debt was 9.4% for the six months ended June 30, 2025 compared to 10.5% in the prior year

Interest expense on subordinated

renewable notes was $1.3 million for the six months ended June 30, 2025.

The average balance of the outstanding subordinated debt increased

by $5.9 million to $27.5 million for the six months ended June 30, 2025 compared to $21.6 million for the prior year.

The average yield

of subordinated notes was 9.7% in the current and prior period.

In June 2021, we completed a

residual interest financing of our residual interests from previously issued securitizations in the amount of $50.0 million.

2024, we completed a new residual interest financing of our residual interests from previously issued securitizations in the amount of

$50.0 million.

Interest expense on the residual interest financing was $7.0 million for the six months ended June 30, 2025 compared to

$3.7 million for the same period in 2024.

The following table presents

the components of interest income and interest expense and a net interest yield analysis for the six-month periods ended June 30, 2025

Six Months Ended June 30,

(Dollars in thousands)

Interest Earning Assets

Loan portfolio

Interest Bearing Liabilities

Warehouse lines of credit

Residual interest financing

Securitization trust debt

Subordinated renewable notes

Net interest income/spread

Net interest yield (2)

Ratio of average interest earning assets to average interest bearing liabilities

(1) Average balances are based on month end balances except for warehouse lines of credit, which are based on daily balances.

(2) Annualized net interest income divided by average interest earning assets.

Three Months Ended

March 31, 2025

March 31, 2024

Six Months Ended June 30, 2025

Compared to June 30, 2024

(In thousands)

7 unchanged sentences

Net interest income/spread

Our evaluation of the allowance for credit losses indicated that the reserves against future

losses are adequate as of March 31, 2025.

The allowance applies only to our finance receivables originated through December 2017, which

we refer to as our legacy portfolio.

Finance receivables that we have originated since January 2018

are accounted for at fair value.

Our evaluation of the allowance for credit losses indicated that the reserves against future losses are adequate

as of June 30, 2025.

The allowance applies only to our finance receivables originated through December 2017, which we refer to as our

legacy portfolio.

Finance receivables that we have originated since January 2018 are accounted for

at fair value.

Under the fair value method of accounting, we recognize interest income net of expected credit losses.

Thus, no provision for credit loss expense is recorded for finance receivables measured at fair value.

For the three months ended March

31, 2025, we recorded a reduction to provision for credit losses on finance receivables in the amount of $979,000.

Thus, no provision

for credit loss expense is recorded for finance receivables measured at fair value.

For the six months ended June

30, 2025, we recorded a reduction to provision for credit losses on finance receivables in the amount of $1.8 million.

The reserve decrease

2 unchanged sentences

This compares to $3.6 million in reductions to

provision for credit losses for the three months ended March 31, 2024.

provision for credit losses for the six months ended June 30, 2024.

Sales expenses consist primarily

1 unchanged sentence

Our sales representatives earn a salary plus commissions

based on volume of contract purchases.

Sales expense increased to $5.9 million during the three months ended March 31, 2025, from $4.9

million for the same quarter in 2024.

We purchased $451.2 million of new contracts during the three months ended March 31, 2025, compared

to $346.3 million in the prior year period.

based on volume of contract purchases and sales of ancillary products and services that we offer our dealers.

Sales expense increased

to $11.6 million during the six months ended June 30, 2025 from $10.8 million in the same period in 2024.

We purchased $884.2 million

of new contracts during the six months ended June 30, 2025 compared to $778.2 million in the prior year period.

Occupancy expenses was $2.8

million for the three months ending March 31, 2025, which is down from the $1.6 million in the first quarter of 2024.

million for the six months ending June 30, 2025, which is down from $3.0 million for the same period in 2024.

Depreciation and amortization

expenses increased to $498,000 compared to $436,000 in the previous year.

For the three months ended March 31, 2025, we

recorded income tax expense of $2.1 million, representing a 31% effective tax rate.

In the prior period, our income tax expense was $2.0

million, representing a 30% effective tax rate.

six months ended June 30, 2025, we recorded income tax expense of $4.3 million, representing a 31% effective tax rate.

In the prior period,

our income tax expense was $4.0 million, representing a 30% effective tax rate.

Credit Experience

8 unchanged sentences

Total Managed Portfolio (Excludes Third Party

March 31, 2025

March 31, 2024

June 30, 2025

June 30, 2024

December 31, 2024

15 unchanged sentences

____________________________________

(1) All amounts

and percentages are based on the amount remaining to be repaid on each automobile contract.

The information in the table represents the

gross principal amount of all automobile contracts we have purchased, including automobile contracts subsequently sold in securitization

transactions that we continue to service.

The table does not include certain contracts we have serviced for third parties on which we

earn servicing fees only and have no credit risk.

(2) We consider

an automobile contract delinquent when an obligor fails to make at least 90% of a contractually due payment by the following due date,

which date may have been extended within limits specified in the Servicing Agreements.

The period of delinquency is based on the number

of days payments are contractually past due.

(1) All amounts and percentages are based on

the amount remaining to be repaid on each automobile contract.

The information in the table represents the gross principal amount of all

automobile contracts we have purchased, including automobile contracts subsequently sold in securitization transactions that we continue

The table does not include certain contracts we have serviced for third parties on which we earn servicing fees only and have

no credit risk.

(2) We consider an automobile contract delinquent

when an obligor fails to make at least 90% of a contractually due payment by the following due date, which date may have been extended

within limits specified in the Servicing Agreements.

The period of delinquency is based on the number of days payments are contractually

Automobile contracts less than 31 days delinquent are not included.

The delinquency aging

categories shown in the tables reflect the effect of extensions.

(3) Amount in

repossession represents financed vehicles that have been repossessed but not yet liquidated.

(4) Amount in

repossession and accounts past due more than 90 days are on non-accrual.

The delinquency aging categories shown in the tables reflect

the effect of extensions.

(3) Amount in repossession represents financed

vehicles that have been repossessed but not yet liquidated.

(4) Amount in repossession and accounts past

due more than 90 days are on non-accrual.

Net Charge-Off Experience

Total Managed Portfolio

(Excludes Third Party Portfolio)

Finance Receivables Portfolio

9 unchanged sentences

interim consolidated financial statements.

March 31, 2025, and March 31, 2024, percentages represent three months ended March 31, 2025,

and March 31, 2024,, annualized.

June 30, 2025, and June 30, 2024, percentages represent three months ended June 30, 2025, and

June 30, 2024, annualized.

December 31, 2024, represents 12 months ended December 31, 2024.

35 unchanged sentences

believe that a prudent extension program is an integral component to mitigating losses in our portfolio of sub-prime automobile receivables.

The table below summarizes the status, as of March 31, 2025, for accounts that received extensions from 2011 through 2024:

The table below summarizes the status, as of June 30, 2025, for accounts that received extensions from 2011 through 2024:

Period of Extension

# Extensions Granted

Active or Paid Off at March 31, 2025

% Active or Paid Off at March 31, 2025

Active or Paid Off at June 30, 2025

% Active or Paid Off at June 30, 2025

Charged Off > 6 Months After Extension

8 unchanged sentences

For example, of the accounts granted extensions in

2019, 57.8% were either paid in full or active and performing as of March 31, 2025.

2019, 57.8% were either paid in full or active and performing as of June 30, 2025.

Each of these successful accounts represent continued

8 unchanged sentences

about our extensions is provided in the tables below:

Three Months Ended March 31,

Six Months Ended June 30,

Year Ended December 31,

Average number of extensions granted per month

4 unchanged sentences

and owned by third parties

March 31, 2025

March 31, 2024

June 30, 2025

June 30, 2024

December 31, 2024

21 unchanged sentences

for managing our collection efforts, we regularly work with our customers to resolve delinquencies.

Our staff are trained to employ a

counseling approach to assist our customers with their cash flow management skills and help them to prioritize their payment obligations

Our staff are trained in employing

a counseling approach to assist our customers with their cash flow management skills and help them to prioritize their payment obligations

in order to avoid losing their vehicle to repossession.

33 unchanged sentences

Net cash provided by operating

activities for the three-month period ended March 31, 2025, was $73.9 million, an increase of $24.2 million, compared to net cash provided

by operating activities for the three-month period ended March 31, 2024, of $52.7 million.

activities for the six-month period ended June 30, 2025 was $128.3 million, a increase of $32.3 million, compared to net cash provided

by operating activities for the six-month period ended June 30, 2024 of $96.0 million.

Net cash from operating activities is generally

2 unchanged sentences

Net cash used in investing activities

was $194.1 million for the three months ended March 31, 2025, compared to $108.6 million in the prior year period.

was $360.8 million for the six months ended June 30, 2025 compared to $317.8 million in the prior year period.

Net cash used in investing

activities generally relates to new purchases of automobile contracts net of principal payments and other proceeds received during the

Purchases of finance receivables excluding acquisition fees were $449.6 million and $328.9 million during the first three months

Purchases of finance receivables excluding acquisition fees were $882.9 million and $753.8 million during the first six months

of 2025 and 2024, respectively.

Net cash provided by financing

activities for the three months ended March 31, 2025, was $166.3 million compared to $81.5 million in the prior year period.

activities for the six months ended June 30, 2025 was $255.3 million compared to $363.0 million in the prior year period.

Cash provided

1 unchanged sentence

trust debt and net proceeds or repayments on our warehouse lines of credit and other debt.

In the first three months of 2025, we issued

In the first six months of 2025, we issued

$862.4 million in new securitization trust debt compared to $1,307.1 million for the same period in 2024.

We repaid $293.0 million in securitization

trust debt in the three months ended March 31, 2025, compared to repayments of securitization trust debt of $268.7 million in the prior

In the three months ended March 31, 2025, we had net repayments on warehouse lines of credit of $45.8 million, compared to

net advances from warehouse lines of credit of $17.2 million in the prior year’s period.

We repaid $642.7 million in

securitization trust debt in the six months ended June 30, 2025 compared to repayments of securitization trust debt of $563.7 million

in the prior year period.

In the six months ended June 30, 2025, we had net repayments on warehouse lines of credit of $16.6 million,

compared to net advances from warehouse lines of credit of $150.7 million in the prior year’s period.

We purchase automobile contracts

16 unchanged sentences

be limited in our ability to purchase automobile contracts due to limits on our capital.

As of March 31, 2025, we had unrestricted cash

As of June 30, 2025, we had unrestricted cash

of $15.8 million and $136.4 million aggregate available borrowings under our two warehouse credit facilities (assuming the availability

of sufficient eligible collateral).

As of March 31, 2025, we had approximately $23.5 million of such eligible collateral.

As of June 30, 2025, we had approximately $18.6 million of such eligible collateral.

manage our liquidity include maintaining our rate of automobile contract purchases at a level that matches our available capital, and,

as appropriate, minimizing our operating costs.

During the three-month period ended March 31, 2025, we completed one securitization aggregating

During the six-month period ended June 30, 2025, we completed two securitizations aggregating

$862.4 million of notes sold.

15 unchanged sentences

term securitizations contain cross-default provisions.

Such cross-default provisions would allow the respective creditors to declare a

default if an event of default occurred with respect to other indebtedness of ours, but only if such other event of default were to be

accompanied by acceleration of such other indebtedness.

As of March 31, 2025, we were in compliance with all such financial covenants.

Such cross-default provisions would allow the respective creditors to declare

a default if an event of default occurred with respect to other indebtedness of ours, but only if such other event of default were to

be accompanied by acceleration of such other indebtedness.

As of June 30, 2025, we were in compliance with all such financial covenants.

We have and will continue to

have a substantial amount of indebtedness.

At March 31, 2025, we had approximately $3,300.0 million of debt outstanding.

At June 30, 2025, we had approximately $3,392.8 million of debt outstanding.

Such debt consisted

6 unchanged sentences

We had $28.8 million and $26.5 million in subordinated renewable

notes outstanding at March 31, 2025, and December 31, 2024, respectively.

notes outstanding at June 30, 2025, and December 31, 2024, respectively.

In June 2021, March 2024, and again on March 20, 2025, we completed

1 unchanged sentence

million, respectively.

As of March 31, 2025, all $165.0 million of the residual interest debt remains outstanding.

As of June 30, 2025, all $155.1 million of the residual interest debt remains outstanding.

Although we believe we are

5 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis